THE SNP have been challenged to use new tax and spend powers to make up for a £1 billion deficit in the Scottish block grant created by George Osborne’s latest austerity measures.

The Scottish Tories have pointed out that the £20 billion cuts to departmental spending ordered by the Chancellor will happen at the same time as the Smith Commission powers on income tax and welfare are transferred to Holyrood.

The new powers give Holyrood control over income tax and £2.5 billion of welfare spending with the ability to increase any benefit or create new ones.

However, the SNP have so far not outlined what they would do with the new powers.

Scottish Conservative chief whip John Lamont said: “The SNP is always talking about powers it wants, and money it wants to spend.

“Now we know these powers are coming, it’s going to have to change tack.

“We need to see detail from the SNP on how it will use these powers and what spending decisions it will make.”

Kirkcaldy and Cowdenbeath MP Roger Mullin, an SNP Treasury spokesman, said: “No wonder John Lamont failed to win the seat he stood in at the General Election and the Tories’ chalked up their lowest share of the vote in Scotland since 1865 - they are boasting about slashing Scotland’s budget by another billion pounds as part of a political stunt.

“The SNP are focused on opposing Tory cuts - unlike the Labour Party - and achieving the far fuller powers in the Scotland Bill that the No campaign parties promised in the referendum.”

He added: “Like other parties, we will publish a manifesto for the next year’s Holyrood election setting out all our policy proposals, based on the powers Scotland will have at its disposal in the next parliament.”